Being in the market is better than picking right time to invest

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Opinion | Being in the market is better than picking right time to invest

Despite global and local problems forecasts of when to invest are likely to be wrong and it pays to be a proactive investor“Is now a good time to invest?” is one of the most frequently asked questions in the investment world. While seemingly innocent, this question invariably leads to furious debate, with rafts of evidence put forward by both the “yes” and “no” camps.

Then there’s the Skyscraper index, which postulates that China’s 117-storey Goldin Finance Tower and Saudi Arabia’s 1km high Jeddah Tower mean a global economic recession is imminent. And with Africa’s soon-to-be tallest building under construction in Nairobi, the index further implies that global woes will reach local markets.

According to their study, each of these investors invests $1,000 every year in the S&P 500 index starting in 1989. But the SuperTimer has the uncanny advantage of the power of foresight to pick the best day of each year to invest, buying low. The BadTimer does the exact opposite, choosing the worst day of each year to invest, buying high.

The result was largely similar. The SuperTimer would have grown his wealth to a handsome R906,530. But the unlucky timer would have accumulated a portfolio of R794,988.Despite the tumultuous events of the past three decades, the transition to democracy, the ousting of Mbeki, the global financial crisis and the Zuma years, the market loser still achieved as much as 88% of the SuperTimer’s result.

Putting forecasting aside, we added two other investment strategies to the mix: the proactive investor with a “get on with it” approach who invests on the first day of every year, and the “procrastinator” who holds on to their cash and invests on the last day of each year.

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